Arbitration

Arbitration Agreement according to the great English Jurist Sir Edward Blackstone, is a bond entered into by two or more parties to abide by the decision of an arbitrator .... [Blackstones Commentaries 1768.]

An arbitrator according to the Oxford English Dictionary is a person to whom the conflicting parties agree to refer their claims to obtain an equitable decision. And that arbitrator is able to decide "according to ones will or pleasure; uncontrolled and is an absolute decision."

With respect I agree with Sir Edward Blackstone, but not with the Oxford English Dictionary. The dictionary is out of date. An arbitrator is of course a person to whom the parties have referred their dispute; but the arbitrator is not able to decide according to his will or pleasure nor is he uncontrolled. Today's arbitrator is controlled either at common law or, if the agreement to arbitrate is in writing, controlled by Statute or by particular Arbitral rules. What is more, the decision itself must decide rights according to law .... unless the parties agree some other basis upon which he may decide. I will come back to that alternative basis.

Arbitration antedates legal systems and courts. In Roman times litigation was no more than private arbitration with the approval and assistance of a magistrate, the Praetor, elected annually for that purpose. Cicero wrote "Nore would our ancestors permit to be a Judex even in the most trifling money matters, not to speak of offers concerning the dignity of a man, unless the offering parties were agreed upon him." Then, in the middle ages, English merchants resorted to arbitration to settle disputes long before the Kings Courts found any way to enforce contractual obligations. Shakespeare wrote:

"The end crowns all,
And that old common arbitrator, time,
Will one day end it."

The English Parliament began to take a hand in 1698. "An Act for determining differences by Arbitration, ..... It shall and may be lawful for all merchants and traders and others desiring to end any controversy, suit or quarrel ... by a personal action or suit in equity, by arbitration whereby they oblige themselves to submit to the award or umpirage of any person or persons .... so agreed."

Other Acts followed. The Arbitration Act 1889 provided for something called a 'Statement of Case'. The arbitrator could reach for the Court to help him decide a question of law. The relationship between the arbitrator and court was important. The court became a supervisor. Moreover it began to insist that the arbitrator made his decision according to law.

And here is the root in time of a debate. It was once true that the commercial arbitrator decided according to such notions as commercial men had about commerce. He was an expert from his particular part of trade or profession; he applied those standards. It was easy. But as the decades rolled by and the industrial age unfolded so too common law and Statute began to regulate and interfere with trade notions and even customs. The Arbitrator had to now consider the legal relationships of the parties such as were developing in the law of contract. He had to pay attention to decided cases in the courts, to statute, and of course to what custom and practice of "his trade" was left unscathed by new laws. Lawyers were now needed by merchant men since their business was now regulated by new rules.

Let me be clear. The arbitrator's job is to decide disputed facts using the evidence established by the parties or an inquiry. Then, the arbitrator applies the decided fact to the rules or laws applicable to the parties relationships. And sometimes those rules or laws are disputed. He must decide that quarrel too.

As for the burgeoning Arbitral Acts, the peoples Parliament across the world's Jurisdiction unfolded, developed, improved the practice and procedure for arbitration. In England, Wales and Northern Ireland for example there is the Arbitration Act 1996 effective from 31 January 1997. It is a masterpiece. It codifies powers, procedures, and liberates arbitrators. It invited those across the globe to come to London to resolve their disputes by arbitration.

Earlier I mentioned the root of a debate. Since arbitration was originally a matter for commercial men applying commercial standards rather than law some commercial people hanker for that system. It has great merit. The English Arbitration Act 1996 expressly provides an opportunity for the parties to empower an arbitrator to decide a dispute not according to law. It is open to the parties to bless the arbitrator with the power to decide on commercial grounds. And indeed, people in other Jurisdictions found their legal system on just such standards. The Arbitration Act 1996, will accommodate, by agreement, what the parties want.

In general terms however the process of arbitration is an in-depth forensic investigation of a dispute. It is every bit as thorough as litigation. An arbitration can take a long time and suffer all the expense of a court case. But that's not always true. Indeed the Arbitration Act 1996 provides a welcome opportunity to correct what had become a rigid and costly process. The key is in the hands of the arbitrator. He can "tailor-make" the procedure. He can make it fit to the particular dispute. For example certain issues can be dealt with via documents only. Alternatively he can jettison the adversarial process of litigation (and much arbitration) and conduct an investigative regime whereby the arbitrator takes the initiative in establishing the facts and the law. The arbitrator's guiding light is simple, he must adopt cost effective procedures suitable for the case and above all be fair. In the twelve months that this new act has been in force in this country we arbitrators are beginning to see a marked step away from litigious procedures. The technical arbitrator can use his professional knowledge to root out the evidence. The lawyer arbitrator can vigorously inquire of both parties similarly to root out the true position. There is some justification in suggesting that the quicker Arbitration distances itself from rigid litigious procedure, the better. Truth to tell, its all down to the arbitrators to shift the emphasis. Adopt a new and exciting procedure but remember this; the arbitrator's job is to decide disputed fact and decide disputed law then apply the decided fact to decided law. The procedure adopted only empowers the arbitrator on his route to efficiently get to that end result. Be flexible.

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